How To Trade Cryptocurrencies – Day Trading, Investing, & Speculation

We’re all charmed by the perspective of making money with the littlest possible effort. So how does making money with money sound? Pretty good, huh? Traditionally, there are two options: investments and trading OR speculation.

In the cryptocurrency world, the first is quite simple. Purchase a coin, then hope for the best. However, to get an amazing result, you need either luck or some serious knowledge, and be on the lookout for the latest news from around the cryptoverse.

Not to mention a lot of money.

The information provided here is for informational purposes only and should not be seen as investing advice. Our opinions on this site are only that, if you are considering an investment into cryptocurrency or anything we speak about on this site, please advise a trusted financial professional first, before doing so.

Sure, if you acquired a single Bitcoin in 2011, you might’ve got hold of a car or a small apartment in some places, but usually, people look for a greater scale of investment. And this one was very long term, it shot up into the $15k range only in 2017. So, putting in small amounts of money isn’t likely going to be worth it.

Here comes in trading – you can even use it as a source of your income once you get really good and have a diverse portfolio. You don’t need a lot of money to start making money, although it’ll be real slow gains if you start with less than $1000.

You’re more likely to take losses, but hey, no pain no gain.

If you’re looking to get into crypto trading, ​let's talk about the fundamentals:

Trading Fundamentals

First off, you need to purchase cryptocurrency. This is where exchanges come in and you can trade your fiat (government/country currency) into cryptocurrency. For a deeper look at some entry level exchanges for Bitcoin and a few altcoins, check out this article.

Now, the question is: “which coin should I choose?”. There is no concrete answer. You need to read, read, and read to get a grasp of the best decision. Most of the time it's usually Bitcoin, Ethereum, or Litecoin - at least at the time of writing this article.

Another very, very important point is to be rational; don’t use your emotions, but try to look at where other investors could be coming from.

What happened? This is the time where news of China shutting down cryptocurrency exchanges hit, along with ICO bans. This news resulted in almost a $1000 dollar loss of price in just a few days. People thought - “Oh no, China is going to ban Bitcoin. China is a key player in the market, therefore I should sell now, as there will be no better time, ever”.

Or any other variation on this thought.

Panic selling, maybe.

But a smart player thought this: “This news will incite panic. People will sell. It’s time for me to shine and purchase BTC when it hits a low point”. And many did just that. Hence, the bounce-back in price.

The bounce-back resulted in a $1000 profit for those who purchased a single Bitcoin on September 15th, and sold on September 19th. 200% in general. Most people bet more money than this. Imagine you put in one million dollars. Now it’s two million.

It’s an incredibly profitable venture for the so-called financial whales – owners of considerable wealth. The more money you put in, the greater possible gains, but also the greater possible losses. Most don’t have a million dollars to spend on crypto, but $1000 of profit will still do.Concluding this section, the key to trading and speculation is understanding human psychology and staying vigilant. Another important trait of a good trader is decisiveness. Always cut your losses short.

When an asset falls down and you believe it won’t bounce back soon, sell it immediately.

Don’t fall for the sunk cost fallacy. Basically, the misconception in this case is as follows: you believe that if you’ve invested money, it’d be a waste to sell the asset; you know that in the case of Bitcoin, "it’ll likely bounce back one day."

While that might be true, consider this: you’re making a decision based on your emotional attachment to the investment, and the more you’ve invested, the more difficult it is to drop it. Think about the economic costs of not selling the asset as soon as it starts sinking. You’re losing money, right here, right now.

It might bounce back, but it might not. If it will, it could take anywhere from a week to a year. The money you’ve reclaimed from the falling coin could be used to trade something else. Reinvest in another promising coin. Keep it moving if you want to make a profit. Don’t get attached to your trades. You can’t keep a perfect score and never lose anything. It’s just not realistic.

Have the same things in mind when cashing out. Don’t wait for the very best moment. It’s unlikely you’ll hit the sweet spot of the rising price without insider knowledge. Cash out as soon as you start to meet your daily/weekly goals for trading profit.

A lot of people get fooled by greed, and then miss their possible profits altogether, sometimes even incurring losses. Thinking rationally is what’s important.

Beyond Trading Bitcoin or Ethereum

While I’ve gone off a bit from the original question of coin choice, these basics are of utmost necessity in trading. Now, generally, lesser known altcoins are used for trading but be aware of trading volume. Too low of volume means your investment will be illiquid.

As you can see, Bitcoin is expensive and you might require a lot of money in order to make a significant profit.

Ripple, Cardano, Verge, IOTA are all good choices to get your feet wet in this money-making endeavor but most of the time you'll have to enter through another crypto as a gateway to reach these trading altcoins as they are only able to be traded with another cryptocurrency.

Nevertheless, always conduct your own market research; think about how others might react to news and the technological impact of the coins.

Cryptocurrencies are very volatile, and the market is ever-changing, so trading is not a thing to do for just a few minutes a day. It’s an occupation, taking hours of time for research, defining the right trading signals, and making decisions without all the information.

Trading in cryptos is quite hard right now, but as the ecosystem matures and liquidity rises for many altcoins - it'll come soon enough that many more people will be able to make crypto trading their career - just like stock traders have.